HOA Lawyer Blog

Architectural Variances Binding Future Owners

Published on: March 26, 2019 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – We are thinking about granting a variance to the Covenants of our Homeowner’s Association. The question is: would the Variance, if granted, apply to the next landowner (i.e., does the grant of a variance run with the land)?

Answered – A homeowners association’s (“HOA’s”) governing documents may permit the HOA to, under limited and extraordinary circumstances, issue a variance from compliance with one or more of the HOA’s architectural standards. Because the decision to grant a variance has been held to be analogous to the issuance of a zoning variance by an administrative agency, HOAs are limited to granting variances in unique and extraordinary circumstances where substantial evidence would justify the desired variance. (See e.g., Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642, 652, quoting Topanga Assn. For a Scenic Community v. County of Los Angeles (1974) 11 Cal.3d 506, 517-18.)

For example, and with respect to zoning variances, said variances are granted “only when, because of special circumstances applicable to the property, including size, shape, topography, location or surroundings, the strict application of the zoning ordinance deprives such property of privileges enjoyed by other property in the vicinity and under identical zoning classification.” (Cal. Govt. Code § 65906.) Thus, it is the unique nature of the land and its surroundings which would justify the issuance of a zoning variance, not necessarily the individual desires of the property owner.

Cases which have discussed variances in the context of a HOA have not addressed the issue of whether architectural variances are perpetual in nature (i.e., whether the grant of a variance runs with the land and binds future property owners). As such, and given the Court’s treatment of architectural variances as being analogous to the issuance of a zoning variance, it is important to examine the scope of a zoning variance to determine whether said variance applies individually to the owner of the property when the variance is issued, or if it applies to the property upon which the variance is given and therefore runs with the land.

In Cohn v. County Bd. Of Supervisors, the California Court of Appeal held that a variance from the general plan of zoning for use of property was “not personal to the owner at the time of the grant, but [was] available to any subsequent owner….” ((1955) 135 Cal.App.2d 180, 184, quoting 62 C.J.S. § 547 (now 66 C.J.S. § 472.) In other words, the variance runs with the land and binds future owners. (Id.) Accordingly, given the similar treatment of architectural variances to zoning variances, it is reasonable to conclude that such architectural variances are not personal to the owner at the time of issuance by the HOA, but runs with the land and binds future owners of the property.

In light of the binding nature of architectural variances, there may be circumstances where it would be prudent for the HOA to document such variance through a recorded agreement or covenant. This is particularly important where the HOA’s approval is conditioned upon continued action by the property owners (e.g., maintenance and indemnification). Moreover, although the property owner would have an affirmative obligation to disclose the existence of any variance granted and/or any obligations imposed by the Association in connection therewith (see generally, Kovich v. Paseo Del Mar Homeowners’ Assn. (1996) 41 Cal.App.4th 863), a recorded agreement is the most dependable way of ensuring that future owners are on notice of the existence of the agreement and they assume upon purchase.

Board members must be cautious when granting variances to architectural standards, doing so only where extraordinary circumstances warrant. When a variance is granted, the Board should ensure that any conditions imposed on such approval is clearly stated in the Board’s decision, and, in some circumstances, documented in a recorded agreement. Accordingly, the foregoing highlight’s the importance of involving the HOA’s legal counsel to guide the Board in determining whether a variance should be documented by way of a recorded agreement.

-Blog post authored by TLG Attorney, Matthew T. Plaxton, Esq.

New Client: Briarwood in Wildomar Community Association

Published on: March 19, 2019 | by Steven J. Tinnelly, Esq.

Briarwood2-300x169 It’s our privilege to welcome Briarwood in Wildomar Community Association to Tinnelly Law Group’s growing family of HOA clients.

Nestled in between the cities of Murrieta and Lake Elsinore, Briarwood features beautiful single-family and multigenerational new homes in Wildomar. Residents will be able to enjoy Briarwood’s community park and the natural scenic beauty Wildomar has to offer.

Our HOA lawyers and staff look forward to working with Briarwood’s Board and management.

New Client: Portarosa Community Association

Published on: March 12, 2019 | by Steven J. Tinnelly, Esq.

Portarosa-300x169 It’s our privilege to welcome Portarosa Community Association to Tinnelly Law Group’s growing family of HOA clients.

Portarosa by Lennar is a community of beautiful new townhomes set behind private gates conveniently located near the Birch Hills Golf Course in Brea. Innovative new home designs provide open interiors, private courtyards, and indoor-outdoor living space. Expansive amenities including a community pool with spa, outdoor barbecue, and neighborhood park offer family-friendly options for entertainment.

Our HOA lawyers and staff look forward to working with Portarosa’s Board and management.

Courts Will Defer to the Decisions of Boards Based on Good Faith and Regard for the Best Interests of the Community

Published on: March 5, 2019 | by Steven J. Tinnelly, Esq.

agriculture-berries-bunch-760281-e1551829548999 In Eith v. Ketelhut (2018) 31 Cal.App.5th 1, a homeowners association featuring estate properties where members maintain fruit orchards and vineyards yielding fruit that can be made into wine and offered to the public for sale required the Board of Directors (“Board”) to determine if sale of products made from fruit produced on the property is a prohibited business or commercial activity under the CC&Rs. Looking to the purpose of the prohibition – to protect the residential character of the community – the Board examined whether the activity negatively impacted the residential character of the community.

In 2003 the Ketelhuts received approval from the Los Robles Hills Estates Homeowners Association’s (“HOA”) Architectural Committee (“Committee”) to plant landscaping on their property which included a vineyard of 600 plants. The Committee approved the Ketelhuts’ vineyard as it had approved other members’ avocado and fruit trees. The Ketelhuts did not mention using the grapes to make wine for sale. Five years later in 2008 the fruit was harvested and removed to an off-site winery to be made into wine. The Ketelhuts commenced a wine business in 2009, obtaining the necessary licenses, and began selling wine in 2010 over the Internet to the public and local restaurants and hotels. The Ketelhuts characterized the vineyard as a hobby, but they filed forms with the IRS claiming the vineyard as a “business.”

Eith and other neighbors demanded the Ketelhuts cease operating a commercial vineyard, so the Board investigated the Ketelhuts’ vineyard operation. The Board determined that the vineyard did not constitute business or commercial activity prohibited by the CC&Rs, because there was no negative impact on the community. No wine was produced or stored on the property, there was no tasting room drawing retail traffic to the community, and the wine was sold over the Internet to the public and local restaurants and hotels and shipped from an off-site warehouse.

Eith and other neighbors sued the Ketelhuts for operation of the vineyard as a prohibited business or commercial activity in violation of the HOA’s CC&Rs. The trial court elected not to decide whether the operation of the vineyard was a prohibited business or commercial activity, but to find in favor of the Ketelhuts by applying the rule of judicial deference adopted by the California Supreme Court in Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4^th 249 (“Lamden”) to the Board’s decision that the vineyard was not a prohibited use based “upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members.”

The neighbors appealed the decision in favor of the Ketelhuts to the California Court of Appeal, which confirmed the trial court’s application of the judicial deference rule in the Lamden case stating, “Common interest developments are best operated by the board of directors, not the courts.” The Court of Appeal further concluded that the Board correctly interpreted the CC&R prohibition of business and commercial activity. The purpose of the prohibition was to protect the community’s residential character; therefore, the prohibition does not encompass activity that has no effect on the community’s residential character.

The Board was in a much better position than the courts to evaluate the vineyard’s effect on the community and found that the residential character of the community was not impacted as a result of the growing and picking of the grapes on the property. No business or commercial activity of making and selling wine occurred on the property and offering the wine for sale over the Internet did not transform use of the property into a prohibited business or commercial activity. At all times the operation of the vineyard was fully consistent with residential use.

-Blog post authored by TLG Attorney, Terri A. Morris, Esq.

New Client: Newport Landing Homeowners Association, Inc.

Published on: February 26, 2019 | by Steven J. Tinnelly, Esq.

Newport-Landing-300x169 It’s our privilege to welcome Newport Landing Homeowners Association, Inc. to Tinnelly Law Group’s growing family of HOA clients.

Newport Landing is a Cape Cod inspired condominium community located in the heart of Costa Mesa. Residents are drawn to the quiet neighborhood, lush landscaping and pathways, and the wonderful amenities.

Our HOA lawyers and staff look forward to working with Newport Landing’s Board and management.

New Client: Chambray Neighborhood Corportation

Published on: February 19, 2019 | by Steven J. Tinnelly, Esq.

Chambray-300x169 It’s our privilege to welcome Chambray Neighborhood Corporation to Tinnelly Law Group’s growing family of HOA clients.

Chambray is a beautiful condominium community located in the desirable Ladera Ranch community. It features 2 story townhome style condominiums surrounded by numerous community parks, pools and recreational amenities.

Our HOA lawyers and staff look forward to working with Chambray’s Board and management.

Recent California Court of Appeal Ruling Limits Anti-SLAPP Protection for Actions by Board of Directors

Published on: February 13, 2019 | by Steven J. Tinnelly, Esq.

*Unpublished Opinion

The recent unpublished opinion of Chemers v. Quail Hill Community Association et al. (2018) shines some light on the oft-misunderstood California Anti-SLAPP statute and its effectiveness as a defense for actions by a homeowners association’s board of directors. The Fourth District California Court of Appeal held that certain actions by the board in a dispute with a director were not in furtherance of the right of free speech or petition as to be protected by the anti-SLAPP statute.

Plaintiff Evan Chemers (“Chemers”) was a member of the board of directors for defendant Quail Hill Community Association (“Quail Hill”), a planned unit development located in Irvine, California. A series of disagreements and escalating tension between Chemers and other members of the board resulted in the board taking affirmative steps to remove Chemers from the board permanently. In June 2016, the board proposed a resolution to create an executive committee consisting of all board members except for Chemers, and in July 2016, the board proposed a resolution to declare Chemers’ board seat vacant on the ground that he did not meet the member-residency requirement. Chemers was not afforded an opportunity to present any evidence of residency, address the board, or have his legal counsel present when he was formally removed.

In October 2016, Chemers filed a lawsuit against the association and other directors, alleging eight causes of action including breach of governing documents, breach of fiduciary duty, negligence, declaratory relief, and various violations of the Civil Code and Corporations Code. In response, the defendants filed an anti-SLAPP motion seeking an order striking the complaint and the eight causes of action within it. The trial court granted the moving defendants’ anti-SLAPP motion as to six of the eight causes of action.

Chemers subsequently appealed the trial court’s decision, and the Court of Appeal concluded that the trial court erred by granting the anti-SLAPP motion as to the claims alleged against Quail Hill for breach of contract, violation of Civil Code section 5850 et seq., and for two counts of declaratory relief. The Court of Appeal reasoned that none of those four causes of action arose out of protected activity – whether speech or petitioning activity – within the meaning of the anti-SLAPP statute.

New Client: Altana Homeowners Association

Published on: January 2, 2019 | by Steven J. Tinnelly, Esq.

Altana We are proud to announce that Altana Homeowners Association has selected Tinnelly Law Group as their association’s legal counsel.

Altana is the first single-family home community in the 230-acre Civita master planned community. Residents enjoy rooftop decks, private courtyards, views of Mission Valley, and easy access to the 14.3 acre Civita Park.

Our HOA attorneys and staff look forward to working with Altana’s Board and management.

New Client: Surfside Homeowners Association No. 1

Published on: December 26, 2018 | by Steven J. Tinnelly, Esq.

We are proud to announce that Surfside Homeowners Association No. 1 has selected Tinnelly Law Group as their association’s legal counsel.

Surfside is an attached single-family home community located in Huntington Beach. Residents enjoy two community pools, two clubhouses, a basketball court, tot lot, barbecue area, and easy access to the beach.

Our HOA attorneys and staff look forward to working with Surfside’s Board and management.

Independent Contractors vs. Employees

Published on: December 18, 2018 | by Steven J. Tinnelly, Esq.

employee-vs-contractor In the recent case of Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court set forth a new test that employers should utilize to determine whether their workers are appropriately classified as independent contractors or employees. (Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal. 5th 903.) The new test will likely have a significant impact on the obligations and liabilities of employers for matters involving payroll taxes, worker’s compensation insurance, IRS reporting, and minimum wage and overtime requirements. In light of the Dynamex decision, all California employers, like homeowners associations, should re-evaluate whether they have appropriately classified their third-party vendors as independent contractors.

The Supreme Court simplified the test that was previously used to classify workers. Prior to the decision in Dynamex, a multi-factor test was utilized. The principal factor was whether the employer had the right to control the manner and means in which work was performed. However, the courts also considered several other secondary factors, such as whether the employer could discharge the worker at will; the level of skill required to perform the work; whether the employer supplied the tools and location to work; the length of time to be worked; the method of payment (whether by time or by job); whether the worker usually performed this type of work; and the subjective beliefs of both parties. This “totality of the circumstances” test created a substantial amount of uncertainty among employers.

The new Dynamex test, referred to as the “ABC Test,” makes is easier for employers to determine in advance whether their workers should be classified as employees or independent contractors. Although the new test is easier to utilize, employers will now find that it is more difficult to classify their workers as independent contractors. The ABC Test begins with the presumption that all workers are employees. To classify a worker as an independent contractor, the employer bears the burden of proving three elements.

First, the worker must be free from the employer’s control and direction, both in actuality and in contract. This prong is essentially a restatement of the principal factor in the pre-Dynamex test, which requires genuine independent contractors to control the manner and means in which they perform their own work.

Second, the worker must perform work for the employer that is outside of the employer’s usual course of business. For example, a homeowners association would likely be able to satisfy Part B, when dealing with workers hired to perform janitorial or landscaping services. This is because homeowners associations are not in the janitorial or landscaping business; rather, homeowners associations are in the business of managing and maintaining Common Interest Developments.

Third, the worker must be customarily engaged in an independently established trade, occupation, or business of the same nature of work performed for the employer. Using the example from above, a homeowners association could satisfy Part C of the test, if it could show that its janitor or landscaper provides the same janitorial or landscaping services for other homeowners association as well. True independent contractors have their own business cards, a separate place of business, and their own book of clients.

It is important to note that the Supreme Court specifically limited its Dynamex holding to disputes involving Wage Orders issued by the Industrial Welfare Commission. In order words, the case’s holding should only be applied to lawsuits that allege violations of Wage Orders (i.e., involving meal and rest breaks and overtime wages). At this point, it is uncertain whether the new ABC Test will be applied to all other legal claims brought against employers. Nonetheless, homeowners associations that routinely hire independent contractors should carefully re-evaluate their hiring procedures to ensure that their workers are properly classified under the ABC Test.

-Blog post authored by TLG Attorney, Sarah A. Kyriakedes, Esq.

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